Finance ministry It was clarified on Friday that the government is not considering imposing goods and service tax (GST) on UPI transactions worth more than Rs 2,000. The Ministry described these reports as completely false, misleading and baseless. The Finance Ministry further stated that GST is levied on fees like merchant discount rate (MDR) related to payments made through some equipment.
MDR removed on UPI transaction
The ministry said in a statement that the Central Board of Direct Taxes (CBDT) has removed the MDR on UPI transactions between traders (PTUM) from January 2020. Since no MDR is currently taken on UPI transactions, no GST is applicable on these transactions.
Government is supporting UPI
The ministry also informed that an incentive scheme is applicable from FY 2021-22 to support and maintain the development of UPI. The scheme is specifically targeted on low -value UPI (P2M) transactions, which benefit small traders by reducing transactions and promotes extensive participation and innovation in digital payments.
UPI transaction reached 260.56 lakh crore rupees
The price of UPI transactions has seen a rapid increase, which has increased from Rs 21.3 lakh crore in FY 2019-20 to Rs 260.56 lakh crore by March 2025. In particular, the P2M transaction has reached Rs 59.3 lakh crore. The ministry also said that the government is committed to promoting digital payments through UPI.
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